Therapy in L.A.


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November 2000
Summarized by Alan Solomon, Ph.D.

Continuing from last month's summary of research and data, there are more studies that show how psychological services save on health care costs:

  • A study of 20,000 participants in an insurance program in Maryland showed that untreated mentally ill patients increased their medical utilization by 61% during a one year period. The same type of patients who received psychological services increased their medical expenditures by only 11%.
  • Providing psychological services to elderly patients reduced average hospital stays by 12 days, when compared to a similar group hospitalized for the same reason but were not given psychological services. Psychological services reduce medical costs dramatically.
  • Bell South adopted a mental health benefit in 1989 encouraging employees to seek care in the least restrictive setting. This reduced inpatient services enough to save $6 million in the three years that followed.
  • Between 1989 and 1992, Champus (the health plan for military personnel and their families) increased spending for outpatient psychological services by $22 million. This saved $200 million in reduced hospitalizations for psychiatric services.
  • Chevron saw a 21% decrease in psychiatric hospitalization costs in one year by allowing provider networks to cover intermediary services and encouraging outpatient therapy.
  • First National Bank of Chicago saved 30% in mental health and substance abuse costs over four years by implementing a psychological services benefit that expanded the range of services covered and reimbursed outpatient costs at 85%.
  • National Cash Register encouraged employees in 1987 to use a mental health plan than emphasized early intervention, access to a full range of care, and treatment in the least restrictive setting. The company saved close to $300,000 in the first year alone, with projected savings close to $2 million.
Health benefits managers and employers will discover substantial savings by providing a more generous package of comprehensive quality psychological services. Restricting access to psychological services and tightly managing/limiting these services results on higher costs overall, eventually. This information is available in a Newsgram on Managed Care and Insurance Issues published by the New York State Psychological Association.

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